Chain Reaction Research New Report: Sawit Sumbermas Sarana: Supplying the Palm Oil Leakage Market, Risks for Purchasers
The palm oil industry’s transformation towards sustainability gained traction in 2013 when major purchaser Unilever engaged SE Asian refiners and traders to embrace ‘No Deforestation’ policies. As a result, in 2013, Wilmar was the first SE Asian refiner or trader to adopt a No Deforestation, No Peat, No Exploitation (NDPE) policy. Many other trading companies in SE Asia, Europe, U.S., and Latin America followed suit.
However, a segment of the market continues to produce or purchase palm oil from recently deforested plantations and cleared peatlands, creating a ‘leakage market’ for unsustainable palm oil. Leakage is defined as any activity in the palm oil industry, production, trade and/or consumption, that is not compliant with NDPE policy requirements. Leakage creates an unlevel playing field and slows and dilutes industry transformation, thereby incurring various financial and reputational risks. The history of Sawit Sumbermas Sarana (SSMS) is instructive.
For more information, please contact Eric Wakker.